OPM urges ‘objective’ ratings in employee awards under new performance rules

Updated guidance from the Office of Personnel Management called on agencies to budget for federal employee awards commending outstanding work in fiscal 2026, but reiterated a new focus on distinguishing what that performance looks like. 

In a Monday memo from OPM director Scott Kupor, the guidance called on agencies to utilize both existing monetary and non-monetary awards programs to ensure “only those individuals who have demonstrated genuinely exceptional individual performance and contributions to the agency receive the largest performance awards and pay adjustments.” 

“Too often, inflated and subjective performance ratings have resulted in dollars available for performance awards being distributed broadly across the majority of employees, thereby diminishing the provision of meaningful bonuses and awards to reward the most deserving employees,” Kupor said, citing fiscal 2024 stats that the average award for an employee rated “fully successful” was 2.4% of their annual salary, while an employee rated “outstanding” had an average award of 4.2% of their salary.

As such, the guidance calls on agencies to conduct comprehensive reviews of their awards programs and remove barriers to rewards for the “the most deserving employees,” such as limiting monetary awards, aggregate spending limits or award pools below statutory or regulatory levels. 

That means for performance-based awards, agencies should set aside at least 60% of their Senior Executive Service, Senior Professional and non-SES/SP bonus pools to Level 4 and 5 performers, those deemed as “Exceeds Fully Successful” and “Outstanding.” 

The policy also states that even though agencies may be facing slimmer budgets in fiscal 2026, they should set aside award funding to be applied towards real-time or mid-year, time-based results, while also applying “a holistic approach” to awards policy by leveraging time-off and quality step increases as incentives in place of cash awards. 

The guidance also notes the reemergence of the Presidential Rank Awards in fiscal 2026 after the incoming Trump administration paused them in March.

The policy follows OPM’s guidance issued in June that called for rigorous performance standards designed to assess fewer employees as above average or outstanding.

To that point, Monday’s guidance points to the expectation that, due to new policies restricting the number of SES personnel that can be rated at Levels 4 and 5, that in fiscal 2026, most employees with receive “Fully Successful” assessments. The policy calls on agencies to reward employees with “Fully Successful” ratings, “but in a way that makes meaningful distinctions among the rewards of all rating levels and reserves the largest bonuses for the highest performers.”

Kupor added in the memo that with fewer employees assessed at higher levels, combined with more rigorous standards for employees deemed lower performers, a select few are going to receive higher rewards. 

“Agencies are also reminded that tolerating low performance results in a lack of trust between employees and supervisors, and supervisors are expected and obligated to identify unacceptable performance via the appropriate performance rating,” he said. “This increased rigor in the assessment of individual and organizational performance will provide for a larger pool of funds from which the high performers—and only high performers—are rewarded appropriately.”